5 steps for managing your digital assets
“Digital assets” are a relatively new asset class.
Digital assets are generally any electronic record in which you have a right or interest. They may have sentimental value (such as Facebook photos) or financial value (such as a PayPal account). As a result of the growing value and prevalence of digital assets, it is important to plan for your digital assets in case of your incapacity or death.
Here are 5 tips for managing this new class of assets:
- Understand What’s Considered a Digital Asset
Examples of digital assets include:
- Social media networks such as Facebook, Instagram and Twitter;
- Internet “cloud” accounts like Dropbox or iCloud;
- Payments accounts like PayPal or Venmo;
- Frequent flier accounts;
- Online retailer accounts such as Amazon.com;
- Online bill-paying accounts;
- Photo-sharing accounts like Flickr or Shutterfly; and also
- Electronic devices, such as a smartphones, tablets, and laptops.
- Create a Detailed Inventory of Digital Assets
You may consider keeping a current list of your online accounts and other digital assets. You also may want to keep a list of corresponding usernames and passwords. If you do keep one or more lists of your digital assets, usernames, and passwords, be sure to store this information in a secure location so unauthorized users can’t easily access your accounts. Depending on your circumstances, a secure location might be your safe deposit box or with a trusted professional or loved one.You may also use a password manager service to help create and securely store passwords on your computer. Password management systems require a master password to gain access to your data. A copy of that main password should be kept in a secure location as well.
- Track Your Digital Assets’ Values
The financial value of Bitcoin or a PayPal account can be easily determined, whereas online photo albums are likely to hold only sentimental value. But, it can be more challenging to value other types of digital assets, such as a popular blog. If the blog creates revenue, that revenue can be tracked, but if you plan to sell the blog, you may need to work with a web appraisal expert to estimate the blog’s “digital finance” value.
- Plan for Your Digital Assets
Consider whether you’d like to allow another person to access your digital assets in the event that you are incapacitated or upon your death. Each online account may have different rules, but if you would like to provide access to a third party:
- First, review your account options. Determine whether each of your providers offers an online tool for you to name another person to access your accounts. Two common online tools are Google’s “Inactive Account Manager” and Facebook’s “Legacy Contact.” If an existing online tool provides the access you want or need, you may decide to use the tool.
- Next, work with your estate planning attorney. Consider naming an individual in your estate plan to access your digital assets. At present, most U.S. states, including Arizona, Florida, Illinois, Indiana, Kansas, Minnesota, and Wisconsin, have adopted some form of the Revised Uniform Fiduciary Access to Digital Assets Act (referred to as “RUFADAA”). When adopted, this state law allows you to name a fiduciary in your estate plan (such as an agent under a power of attorney, an executor or personal representative under your Will, or a trustee under your living trust) to access your digital assets. In order to access electronic communications, such as e-mail, RUFADAA requires that you, as the account owner, specifically state your wish that your fiduciary have access to such communications. If you’ve already designated someone to access an online account through a particular service provider’s online tool, let your attorney know because an online tool designation takes priority over any persons you’ve named in your estate plan – and the designation you made in the online tool might conflict with the estate plan you discuss with your attorney.
- Tell Representatives How You’d Like Your Digital Assets Handled
If you’ve named someone to access your digital assets on your behalf in an online tool or in your estate plan, it can be helpful to give them some guidelines in advance. For instance, do you want family members to leave your Facebook page in place as a memorial after your death, or take it down after a certain period of time? Do you want your children to sell your blog, leave up archived posts, or delete it entirely? Explaining your wishes in advance can make it less stressful for family members to manage your digital affairs in your absence. These conversations also make it more likely that your representatives will understand and follow your specific requests.It is best to consult with a legal advisor regarding your individual situation and goals with respect to your estate plan and disposition of digital assets.BMO Wealth Management is a brand name that refers to BMO Harris Bank N.A. and certain of its affiliates that provide certain investment, investment advisory, trust, banking, securities, insurance and brokerage products and services. Investment Products are: NOT FDIC INSURED – NOT BANK GUARANTEED – NOT A DEPOSIT – MAY LOSE VALUE
- Understand What’s Considered a Digital Asset